Franchise Consultants Brookfield WI

Local resource for franchise consultants in Brookfield. Includes detailed information on local businesses that provide access to marketing programs, advertising advice, franchise mentoring, franchise training, master franchise development, and financial modelers, as well as advice and content on pros and cons of franchise businesses.

Checklist of Questions to Answer Before You Buy A Franchise

by Isabel Isidro

Franchise businesses such as Wendy's, McDonald's and Jack-In-The-Box are booming. The people setting up franchise ideas and businesses know a good thing, and are really promoting this idea. Franchises for just about every conceivable kind of business are being sold in ever increasing numbers.

Some franchises are very good. They treat both the franchiser and the franchisee very well. Others are very one-sided. Still others are almost total rip-offs that trap one into paying ten to fifty times the actual value of the business idea, equipment, or whatever it is they are trying to get you to buy.

Before putting any money into a franchise, you should investigate everything completely. We've prepared a list of questions you should be asking, and should get satisfactory answers to before investing.

1. Has your attorney studied the franchise contract, discussed it completely with you, and do you both approve it without reservations?

2. Does the franchise require you to take any steps which are either illegal or even border on illegal, or are otherwise questionable or unwise in your state, county or city?

3. Does the franchise give you an exclusive territory for the length of the franchise period, or can the franchiser sell a second franchise in your territory?

4. is the franchiser connected in any way with any other franchise company handling similar products or services?

5. If you answered yes to the above questions, what is your protection against the second franchising company?

6. Under what circumstances can you end the franchise contract, and at what cost to you?

7. If you sell your franchise, will you be compensated for your goodwill or will it be lost to you?

8. How many years has the firm been offering you the franchise been in operation?

9. Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees?

10. Has the franchiser shown any certified figures indicating exact net profits of one or more of its members, and have you personally checked the figures with these people?

11. Will the franchiser assist you with:

A management training program; An employee training program; A public relations and advertising program; Capital; Credit; and Merchandising ideas?

12. If needed, will the franchiser assist you in finding a suitable location?

13. Is the franchising firm adequately financed so that it can carry out its sated plans?

14. Does the franchiser have experienced management, trained in depth?

15. Exactly what can the franchiser do for you that you cannot do for yourself?

16. Has the franchiser investigated you carefully enough to assure itself that you can successfully operate a profit to both of you?

17. Does your state have a law regulating the sale franchises, and has the franchiser complied with that law to your satisfaction?

18. How much equity capital will you need to purchase the franchise and operate it until y...

Franchise Legal Considerations

by Jim Brown

One of the most important events in franchising is the introduction of the Franchise Rule on October 21, 1979 by the Federal Trade Commission (FTC). The FTC Franchise Rule requires all franchisors operating anywhere in the U.S. to make full disclosure of the information that a prospective franchisee needs in order to make a rational decision about whether or not to invest.

In effect, the rule obliges franchisors to meet certain FTC standards, such as ensuring that a reasonable basis for any claims exists, that the disclosure has been prepared in accordance with accepted accounting principles, and that there is evidence to support the financial claims, and that the franchisee, among others, can see this evidence.

In particular, the disclosure rule requires that the franchisor provide information about:

(a) The franchisor and its affiliates, describing the business experience of each of its officers, directors, and management personnel responsible for franchise services, training, and other aspects of its program.

(b) Any lawsuits or previous bankruptcies in which the franchisor, its officers, directors, and management personnel have been involved.

(c) Initial franchise fees and other payments required to obtain a franchise, and a description of continuing payments to be made after the franchise opens.

(d) Any restrictions on the quality of goods and services used by the franchisee and where they may be purchased, including restrictions requiring purchases to be made from the franchisor or its affiliates.

(e) Any assistance available from the franchisor or its affiliates in financing the purchase of the franchise.

(f) Restrictions on the goods or services franchisees are allowed to sell and any restrictions on the customers with whom they may deal.

(g) Any territorial protection to be granted the franchisee.

(h) The conditions under which the franchise may be repurchased or refusal renewal by the franchisor, transferred to a third party by the franchisee, and terminated or modified by either party.

(i) Any training programs provided to the franchisees.

(j) Any involvement of any celebrity or public figures in the franchise.

(k) Any assistance provided by the franchisor in selecting the site for the franchisee.

(l) The number of present franchises, franchises projected for the future, franchises terminated or not to be renewed, and the number repurchased in the past.

(m) The financial statements of the franchisors.

(n) The extent to which franchisees must personally participate in the operation of the franchise.

(o) The basis for any earnings claims made to the franchisee, including the percentage of existing franchises that have achieved the results claimed.

(p) The names and addresses of other franchisees.

This disclosure must occur at the first contact with the franchisor, franchise broker, or anyone who represents the franchise for sale, where the subject of buying a franch...

Pros and Cons of Franchise Businesses

by Jim Brown

For the individual owner, there are definite advantages to franchising, some of which are outlined in the list below.

Pros of Franchise Businesses

Well-known trademark, either regionally or nationally, and its cumulative goodwill - saving the business owner the cost of creating and advertising a name that customers already recognize. Established business framework - minimizing the startup problems and guesswork involved in starting a new business. Well-tested sources of supply and service - saving time and trouble in finding suppliers of needed products and equipment. Ongoing sales and marketing assistance - franchisors have proven, existing, and successful systems of advertising and marketing. Financial assistance - banks and similar lending institutions are willing to lend money to a business that has the backing of a successful franchisor. Most franchisors have direct financial assistance or help in finding adequate sources of financing. Reduction of risk - you are buying into an established concept so the risk of failure is lower. Ongoing research and development - most franchisors constantly research and look into vital information such as competition, product demand, seasonal variations, and community attitudes. Site selection and business support - the franchisor helps with selecting a suitable site location, building construction design and supervision, employee training, and operational support. Proven operating methods and procedures for creating and selling the product. Standard quality, uniformity, and desirability of the franchisor's product or service. Collective buying power and centralized purchasing system - franchises may be able to purchase supplies at a reduced cost since the franchisor can purchase in bulk and pass the savings to the franchisees. Furthermore, with franchising expansion seems to come more naturally. Operating a successful franchise may quickly lead to building a second and then a third business, and so on. In fact, some franchisees own all businesses of a particular franchise in an entire geographical area. Fortunes have been built this way.

However, despite the advantages to franchising, buying or starting a franchise business is not for everyone. Some of the disadvantages to franchising are discussed in the list below.

Cons of Franchise Businesses

Loss of control and freedom - since the franchisor's standards have to be adhered to, a franchisee may have limited scope for individual personal initiative. Ongoing royalties could be as high as 10% (or more) of revenues - this amount could determine whether you business is profitable or not. The initial franchise fee can be quite substantial. It can range anywhere from $4,000 to $20,000 and, in some cases, up to $50,000! Advertising fees - there is usually a fee for advertising on a regional or national basis. If the franchisor does not make the best use of your advertising dollars, this could be a waste of money...

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